Bitcoin retreats below $49k as CPI release dashes hopes of rate cuts

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Bit­coin (BTC) price saw a sig­nif­i­cant pull­back, eras­ing gains from Mon­day as investors recal­i­brat­ed their expec­ta­tions for the Fed­er­al Reserve’s mon­e­tary pol­i­cy fol­low­ing the release of Jan­u­ary Con­sumer Price Index (CPI) data.

The flag­ship cryp­to was trad­ing at $48,753 as of press time — a notable devi­a­tion from its recent upward tra­jec­to­ry. The dip liq­ui­dat­ed rough­ly 80% of the long posi­tions over the past four hours, accord­ing to Coin­Glass data.

CPI hotter than expected

The CPI report, a cru­cial infla­tion gauge, indi­cat­ed a year-on-year increase of 3.1%, sur­pass­ing ana­lysts’ pre­dic­tions and sig­nal­ing per­sis­tent infla­tion­ary pres­sures in the economy.

The devel­op­ment has notably damp­ened the prospects for the Fed’s ear­ly inter­est rate cut, with mar­ket sen­ti­ment shift­ing towards a more cau­tious outlook.

Pri­or to the data release, there was spec­u­la­tive opti­mism that the Fed might ease its inter­est rate pol­i­cy as soon as May, buoyed by pre­vi­ous indi­ca­tors sug­gest­ing a soft­en­ing infla­tion­ary environment.

How­ev­er, the unex­pect­ed uptick in infla­tion has led to a reassess­ment of these fore­casts, with the like­li­hood of a May rate reduc­tion now sig­nif­i­cant­ly diminished.

Bitcoin’s price move­ment reflects broad­er mar­ket trends, with risk assets across the board expe­ri­enc­ing volatil­i­ty in response to the infla­tion data.

Broader market trend

The impact was also felt in tra­di­tion­al mar­kets, where yields on 10-year US Trea­sury bonds climbed, and major stock indices like the S&P 500 and the Nas­daq Com­pos­ite faced down­ward pressure. 

This illus­trates the inter­con­nect­ed­ness of cryp­to and tra­di­tion­al finan­cial mar­kets, with investor sen­ti­ment across both realms influ­enced by macro­eco­nom­ic devel­op­ments and cen­tral bank policies.

Despite the short-term volatil­i­ty, the under­ly­ing momen­tum for Bit­coin and the broad­er cryp­to mar­ket remains a top­ic of inter­est for investors. The dig­i­tal asset’s response to infla­tion­ary trends and its posi­tion with­in the broad­er finan­cial land­scape con­tin­ue to be close­ly watched as stake­hold­ers gauge the poten­tial impli­ca­tions of mon­e­tary pol­i­cy deci­sions on the sector’s growth and stability.

As the mar­ket digests the impli­ca­tions of the lat­est CPI report, the focus turns to the Fed’s upcom­ing moves and their poten­tial impact on invest­ment strate­gies. With infla­tion still a key con­cern, the path for­ward for inter­est rates, and by exten­sion, risk assets like Bit­coin, remains a crit­i­cal area of spec­u­la­tion and analy­sis for investors and ana­lysts alike.

Bitcoin Market Data

At the time of press 4:22 pm UTC on Feb. 13, 2024, Bit­coin is ranked #1 by mar­ket cap and the price is down 2% over the past 24 hours. Bit­coin has a mar­ket cap­i­tal­iza­tion of $955.46 bil­lion with a 24-hour trad­ing vol­ume of $39.15 bil­lion. Learn more about Bitcoin ›

Crypto Market Summary

At the time of press 4:22 pm UTC on Feb. 13, 2024, the total cryp­to mar­ket is val­ued at at $1.83 tril­lion with a 24-hour vol­ume of $88.85 bil­lion. Bit­coin dom­i­nance is cur­rent­ly at 52.12%. Learn more about the cryp­to market ›

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